The State Bank of Pakistan's deputy governor has admitted weaknesses in operations of exchange companies and pledged that the central bank is working to bring about necessary amendments in relevant laws to ensure the smooth-running of these companies. Deputy Governor Saeed Ahmad's pledge came in response to a question about a dollar shortage in the local kerb of Lahore on Tuesday, after addressing an awareness session on "housing finance" in a hotel which also saw the presence of representatives of various banks.
Speaking with Business Recorder, he said, "Exchange companies are doing wrongs. Hence, changes in the existing laws are necessary. Under the prevailing laws, the exchange company, if found guilty of any irregularity, either its license is suspended or receive a warning. The punishment of issuing the warning does not prove worthwhile.
Therefore, the central bank is working to introduce such changes in the relevant laws. They are working with law-enforcing agencies against the elements being involved in transfer of foreign currencies through illegal means." When asked about maintaining the minimum capital requirement by private banks, he answered, "All banks are maintaining a minimum cash requirement as per the bank regulations."
Talking about the housing sector, he claimed the country was facing a shortfall of 10 million housing units. "The central bank is conducting a study in order to regulate the housing finance by the banks through a special unit." To another question, he said Islamic banks' products in the housing sector provided much better solutions to its clients. He went on, "The housing and construction sector is an important driver of economic growth, as it employs a large labour force. In Pakistan, the housing sector can be very instrumental in poverty reduction and economic growth.
Investment in the housing sector leads to creation of more jobs in a number of allied sectors, thus helping to overcome poverty eradication efforts. "Presently, the bank is working on few initiatives to create an enabling environment for the banks to increase outreach of housing finance. It involves relatively greater sums of financing compared to other consumer finance products and is extended for longer period of time." It is understood that the central bank, in consultation with different stakeholders, has issued a separate set of prudential regulations specifically for the housing finance.
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